which of the following is/are true regarding debt and equity? 1. debt is a liability of the firm, whereas equity is not 2. debt and equity both provide voting rights to the holders 3. excess debt might cause financial distress 4. equity holders can sue the company if they are not paid any dividends. a. 1 and 3 only b. 3 only c. 2 and 3 d., 3 and 4 e. 1 only

which of the following is/are true regarding debt and equity? 1. debt is a liability of the firm, whereas equity is not 2. debt and equity both provide voting rights to the holders 3. excess debt might cause financial distress 4. equity holders can sue the company if they are not paid any dividends. a. 1 and 3 only b. 3 only c. 2 and 3 d., 3 and 4 e. 1 only

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 20MC: The difference between equity financing and debt financing is that A. equity financing involves...

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Which of the following statements are correct: 1. Owners of incorporated businesses have unlimited liability 2. The maximum amount that equity holders can lose is their original investment 3. Equity value can be negative 4. Lenders may not get loans back in whole 1, 3, and 4 1, 2, 3, and 4 1 and 3 2 and 4
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The difference between equity financing and debt financing is that A. equity financing involves borrowing money. B. equity financing involves selling part of the company. C. debt financing involves selling part of the company. D. debt financing means the company has no debt.
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23) What is owner's equity?A) What a company owesB) What remains after the liabilities are satisfiedC) What a company ownsD) None of the choices are correct Group of answer choices A B C D
The difference between equity financing and debt financing is that Group of answer choices A. equity financing involves borrowing money. B. debt financing involves selling part of the company. C. debt financing means the company has no debt. D. equity financing involves selling part of the company.
5. Which of the following statements is FALSE? a. In the extreme case, the debt holders take legal ownership of the firm's assets through a process called bankruptcy. b. Equity holders expect to receive dividends and the firm is legally obligated to pay them. c. A firm that fails to make the required interest or principal payments on the debt is in default. d. After a firm defaults, debt holders are given certain rights to the assets of the firm.
I. Directions: Write TRUE if the statement is correct; write FALSE if the statement is wrong. Write your answer on the space provided af ter each number. _1. Equity funding involves repayment. _2. The primary disadvantage of equity funding is that the firm's owners relinquish part of their ownership interest and may lose some control. _3. Return on equity depends on company's earnings. _4. Debt financing gives privilege of ownership in a company. _5. When an entrepreneur financed his/her business with debt, lender has the right to tel him/ her how to run a business. _6. When an entrepreneur financed his/ her business with debt, payments are unpredictable and he/ she has no idea what needs to pay every month to pay off the loan. _7. When an entrepreneur financed his/ her business with debt, he/she keeps al the profits. _8. The lender can force the entrepreneur into bankruptcy if he/she cannot pay his/ her loan payments. _9. To force a borrower into bankruptcy for not making their loan…
The difference between equity financing and debt financing is that a. equity financing involves borrowing money. b. debt financing means the company has no debt. c. equity financing involves selling part of the company. d. debt financing involves selling part of the company.
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